Business confidence falls ahead of budget

BUSINESS confidence has slipped in the month before the federal budget.

National Australia Bank's April survey shows employers are particularly worried about weaker than forecast growth in the US, China and Europe.

Treasurer Wayne Swan will deliver his sixth and most likely last budget on Tuesday night, on the back of plummeting government revenue.

"It is possible that uncertainty over the potential implications of tomorrow's budget announcement, and the upcoming election, is keeping firms on edge," NAB says.

The mining sector's confidence reading was at the lowest point since the global financial crisis, as resource companies grappled with sliding commodity prices and as mining investment approached its peak.

And while the latest business confidence reading is above 2012 levels it is well below the long-term trend even though it follows a series of rate cuts last year that took the Reserve Bank's cash rate to three per cent.

The Australian share market is also recovering, with the S&P/ASX200 index last week closing at the highest point in almost five years.

NAB's business confidence index fell by four points in April to a reading of minus two.

But the mining sector's reading was negative 39, posting a second consecutive large monthly fall.

Overall business conditions were subdued but had recovered to minus six in April, up marginally from March's minus seven reading, which was the worst since May 2009.

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